Mr Mossfield asked the Minister for Family Services, upon notice, on 10 September 1996:

How can aged care hostels cope with the additional costs caused as a result of the removal in the Budget of the $3 per day patient subsidy.

Mrs Moylan —The answer to the honourable member's question is as follows:

From 1 July 1997, hostel care level subsidies will no longer be payable for residents with very low dependency. These residents have primarily social and housing related needs rather than a need for care services. Currently, only hostel care level residents who are financially disadvantaged receive a subsidy, set at $3 a day. Funding will be redirected to meet the needs of people with higher care needs such as dementia.

Withdrawal of these subsidies will have a minimal impact on most hostels because it makes up only a very small proportion of their total income. Hostels catering for a mix of residents may not have any reduction in the overall level of resources available to them. A hostel which catered for only hostel care level residents would lose all Government subsidies, but this would comprise only about 10% of their total income.

Although care subsidies will no longer be payable, providers will still receive a payment in respect of pensioners and part pensioners, as a result of the payment of rent assistance through the subsidy arrangements.

Hostel care residents will continue to pay resident contributions. The basic resident contribution for all hostel residents, including hostel care residents, will be increased by $5.40 a week to bring it into line with the nursing home resident contribution, with a gain to the hostel sector of $15 million a year.

The funding structure will give hostel providers considerable management flexibility to maintain their overall income through both daily fees and entry contributions. This means that hostels will not have any significant financial incentive to discharge residents. In addition, outcome standards will continue to require that residents are provided with security of tenure.

This is an area in which stakeholders agreed at my meeting with them on 3 September to work jointly with my Department to develop in more detail the arrangements and protections to apply in respect of hostel care residents.